Africa’s Trade Problem Isn’t What You Think

Trade moves on capital as much as it does on cargo, and yet liquidity—the unseen force that determines who can trade, at what scale, and under what conditions—remains scarce, expensive, and structurally out of reach for many businesses on the continent.

This is not just an African problem; it is the consequence of a global financial and trade system in transition. Geopolitical tensions are redrawing alliances, technology is transforming supply chains, and financial flows are being reconfigured. These changes are shaping trade not just in where goods move, but in who controls the capital that moves them.

And for Africa, that distinction is critical.

For decades, the primary constraint on African trade has been access to financing. Liquidity shortages—compounded by sovereign debt burdens and a persistent reliance on hard currency—continue to throttle intra-continental commerce. Even as the African Continental Free Trade Area (AfCFTA) aspires to integrate a market of over 1.3 billion people, the reality is that trade flows remain disproportionately external, denominated in US dollars, and at the mercy of foreign exchange constraints. The result is a trade landscape where too many African firms are positioned as price takers rather than market makers.

The answer to this impasse will not be found in conventional trade finance structures alone. Supply chain finance, long viewed as a working capital tool, must now be understood as an essential component of trade strategy—one that reflects the interconnectedness between physical informational, and financial supply chains.

When integrated effectively, these elements create a self-reinforcing system that optimises capital efficiency, risk management, and market responsiveness. Increasingly, African businesses are leveraging these solutions to unlock trapped liquidity and fund their expansion ambitions.

The prevailing trade model keeps capital concentrated at the corporate level, forcing suppliers to navigate funding gaps between delivery and payment. The burden of these delays falls disproportionately on smaller suppliers, who either absorb the working capital strain or turn to expensive short-term credit.

Supplier Finance, a form of Supply Chain Finance, eliminates this inefficiency by aligning liquidity with trade activity, ensuring capital moves in step with commerce rather than being trapped in payment cycles. More significantly, it changes the terms under which liquidity is accessed.

Instead of being priced against the supplier’s financial strength—often a limiting factor—it is structured around the corporate anchor’s credit profile, lowering the cost of capital and expanding access to financing. For corporates, this is also an effective risk mitigation tool. Supply chains are financial structures as much as they are logistical ones, and liquidity gaps weaken procurement reliability. By embedding financing into trade, supply chain finance ensures suppliers remain operational, reducing the risk of production delays or raw material shortages. This allows businesses to stabilise supply networks without taking on additional credit exposure, reinforcing resilience in an increasingly unpredictable trade environment.

As solutions such as supplier finance become more deeply integrated into corporate financial strategies, it is proving to be an essential tool for enhancing resilience, improving liquidity, and fostering more collaborative, sustainable supplier relationships.

Yet its full potential remains unrealised.

Unlike in more developed markets, where these mechanisms are widely adopted, many businesses across the continent remain unfamiliar with how supplier finance can provide working capital without the complexity of traditional credit. Limited awareness, fragmented financial infrastructure, and a lack of transparency around eligibility have restricted participation, leaving many businesses unable to integrate supplier finance into their financial strategies. Without targeted industry engagement and clearer structuring of programmes, these solutions risk remaining confined to a narrow segment of the market.

Consequently, supplier finance has largely remained concentrated among Tier 1 and Tier 2 suppliers—businesses with direct corporate relationships—while smaller suppliers further down the chain remain financially constrained. Given that SMEs drive nearly 80% of Africa’s economies, this imbalance is a structural limitation on trade. Expanding access requires deeper collaboration between corporates, banks, and development finance institutions to develop financing structures that allow liquidity to cascade through supply chains. Multi-tier supplier finance offers a potential solution, but its success depends on structuring mechanisms that ensure obligations can be efficiently transferred beyond immediate suppliers without adding complexity or risk.

Africa’s ability to insulate itself from financial instability, sustain intra-continental commerce, and reduce its vulnerability to external shocks will hinge on how well liquidity circulates within its supply chains. Here, the continent cannot afford to remain reactive, reliant on external financial conditions to dictate the trajectory of its trade systems.

Supply chain finance, deployed strategically, offers a pathway to greater financial sovereignty, deeper trade integration, and a more resilient economic future. What comes next is not a question of whether these solutions can work, but how quickly they can be integrated into the fabric of the continent’s trade systems to ensure that liquidity is no longer an obstacle to growth, but a force that accelerates it.